The second round of the latest P5+1 talks with Iran will take place on Wednesday, and the stakes couldn’t be higher. If these talks fail, Iran’s economy will continue to languish and the chance of an Israeli strike on Iran’s nuclear facilities will grow, potentially leading to broader kinetic conflict in the region.

The P5+1 countries will continue to discuss the issue of Iran’s nuclear program, mainly the lack of access to some of its most secretive facilities. Iran continues to deny that its nuclear activities are for anything more than peaceful purposes, but trust between Iran and the West has been the major hurdle up to this point.

Historically, Iran, Israel, and the United States have shown an inability to come to terms about most issues, let alone the nuclear issue. However, it is exactly this topic that will determine what happens between these major powers in the future. During previous attempts at meaningful dialog, Iran has intentionally stalled and outmaneuvered its adversaries in order to buy time. The U.S. and Israel on the other hand have been forceful in their demands and have vacillated between the desire for a peaceful resolution and military intervention.

In 2003, Iran came to the table to offer a proposal on talks including the relief of all U.S. sanctions and access to peaceful nuclear technology in exchange for cooperation in stabilizing Iraq, full transparency on Iran’s nuclear program, cooperation in fighting terrorism, and Iran’s acceptance of the Arab League’s “Land for Peace” declaration in Israel. The U.S. turned down this proposal and instead adopted a tougher policy against Iran.

This has been standard procedure for talks since 2003; one side begins a dialog, but the other does not accept the terms. Iran’s main concern is its right to peaceful nuclear energy, but world powers are not convinced that it is not cultivating a nuclear weapons program. While this standstill continues, so does Iran’s uranium enrichment. As time moves on and Iran approaches what Israel calls a point of no return in its enrichment capacity, Israel is getting more nervous that a strike will be useless.

While there is increased hope for the latest round of discussion, rhetoric from the Iranian side remains volatile, while the U.S. continues to shore up support from its allies in the region. Iranian Foreign Minister Mohammad Mahdi Akhondzadehhe stated recently, “There should be no doubt that the great nation of Iran ...will never abandon exercising its inalienable right to peaceful use of nuclear energy and technology.” Secretary of State Hillary Clinton recently visited India to gain assurance that it will reduce its imports of Iranian oil.

If the next round of talks fails, substantial reverberations will be felt by Iran. Sanctions are beginning to cause serious detriment to its already fragile economy. Prices have soared as the government has had to scale back social spending to offset drastically reduced revenues. Given that Iran’s currency reserves are already low, something will have to give sooner rather than later.

Iran is also on dangerously thin ice with Israel, who is watching this latest bargaining session closely. Should Iran stall or be otherwise difficult on the nuclear issue, those parties in Israel who advocate for a strike will be bolstered in their desires to do so.

Because of these factors, and as Iran continues to lose buyers for its oil, it makes sense that Iran was the initiator of these latest talks. Recently Ayatollah Ali Khamenei has twice restated his 2005 fatwa that nuclear weapons are un-Islamic, potentially giving some reason for careful optimism. Iranian leadership is rational in its foreign policy perspectives, and as the country’s prospects for future prosperity continue to diminish, it is likely that Iran may concede on certain issues that it was once bullish on. As the latest and most lethal sanctions are scheduled to take full effect on July 1, Iran seems to know that an agreement must be reached or suffer further punishment.

However as the U.S. enters talks, the understanding that Iran will not give in on the issue of peaceful nuclear power production is paramount to further progress. If U.S. negotiators are not able to see past this issue — and luckily it looks as though the Obama administration may understand this — there is no reason to believe that this round of talks will lead to positive outcomes.

The timetable for fruitful negotiation between Iran and world powers is rapidly nearing its expiration. Mistrust is the main hurdle to prolonged agreements by all sides, but it is not necessarily an impenetrable barrier to normalized relations. All parties involved seem to recognize that the time for action is now, but substantial work remains to be done before positive outcomes can be reached.